How to Claim Input Tax Credit?

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Sakshi Shah

E-Credit Ledger
GST
GST Portal
GSTR-3B
ITC

Taxpayers registered under the regular scheme can claim the input tax credit on purchases and utilize them towards payment of output tax on sales. The Input Tax credit is deducted from the Output Tax Liability and the Net tax is paid to the government. The process of claiming and utilising tax credit comprises of filing the monthly GST Return i.e. GSTR-3B.

Steps to Claim Input Tax Credit

1. Prepare, Review and Submit GSTR-3B
GSTR-3B is the monthly return with a summary of sales and purchases made during the return period.
a. Prepare – Enter the data of sales, output GST, purchases and input GST
b. Review – Review the calculations of Output GST against Input GST
c. Submit – Submit the data on the GST Portal

How to file GSTR 3B online on GST Portal?
The GSTR-3B is a consolidated summary return of inward and outward supplies. Here is a simple guide on how to file GSTR 3B
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How to file GSTR 3B online on GST Portal?
The GSTR-3B is a consolidated summary return of inward and outward supplies. Here is a simple guide on how to file GSTR 3B
Read More

2. E-Credit Ledger updated
Once the return is submitted, the amount of input tax credit from the purchases of the current month gets populated in the E-Credit Ledger

Input Tax Credit balance

How to Utilise Input Tax Credit?

  1. Calculate Output Tax and Input Tax

    After submitting the return, the next step is to pay off the tax liability of the current month. The calculations are populated in the taxpayer’s account on the GST Portal.
    1. Output Tax Liability – The output GST payable on sales i.e. IGST, CGST, SGST, UTGST or Cess is calculated based on the sales data entered
    2. Input Tax Credit
    E-Credit Ledger – The screen displays the balance of input IGST, CGST, SGST, UTGST or Cess. It includes the input tax credit of purchases from the current month and input tax credit brought forward from earlier tax periods
    E-Cash Ledger – The screen displays the balance of cash deposited by payment of challan

  2. Apply rules for utilisation of Input Tax Credit

    1. IGST – Use ITC of IGST in the sequence of paying output IGST, output CGST and output SGST
    2. CGST – Use ITC of CGST in the sequence of paying output CGST and output IGST
    3. SGST – Use ITC of SGST in the sequence of paying output SGST and output IGST
    4. The ITC of CGST and ITC of SGST cannot be cross-utilised

  3. File Return and Carry forward Input Tax Credit

    After utilising the ITC, make payment of tax through a challan. The system would carry forward the remaining unutilised balance of ITC and use it for payment of taxes in returns of subsequent periods.

Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
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Calculate Input Tax Credit online: ITC calculator
Input Tax Credit under GST means the credit of input tax paid on purchases. ITC can be used to set of against the CGST, SGST and IGST outward tax liabiliy.
Explore
ITC-Utilization


FAQs

Who can claim ITC?

Taxpayers registered under the regular scheme can claim the input tax credit on purchases and utilize them towards payment of output tax on sales. The Input Tax credit is deducted from the Output Tax Liability and the Net tax is paid to the government.

What are the Documents Required for Claiming ITC

To claim ITC following documents are required:
1. Invoice issued by the supplier of goods/services
2. The debit note issued by the supplier to the recipient (if any)
3. Bill of entry
4. An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice if the amount is less than Rs 200 or in situations where the reverse charge is applicable as per GST law.
5. An invoice or credit note issued by the Input Service Distributor(ISD) as per the invoice rules under GST.
6. A bill of supply issued by the supplier of goods and services or both

Is ITC available on Capital Goods?

ITC is available for all capital goods under GST.
However, ITC is not available for:
1. Capital Goods used exclusively for making exempted goods
2. Capital Goods used exclusively for non-business purposes 
No ITC will be allowed if depreciation has been claimed on the tax component of any capital goods.

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